As Black Friday and the holiday shopping season quickly approach, the business community is focusing its attention on this year's holiday retail sales as an indication of the state of the economy after the last eighteen months of recovery. The results of this season's sales will also be viewed as a guide for whether the recovery will prove sustainable or whether recent government policy has fostered any real growth.

We expect this holiday season to provide mixed signals to commentators and policymakers. Considering historical averages, sales will probably still be relatively low. However, we do expect an improvement over last year as stores promote deep holiday discounts.

The real impact of this year's holiday sales will be felt after New Year, once numbers are totaled and analyzed. Strong retail sales will hopefully instigate corporate investment in expansion projects, which would continue our economic recovery and begin to ease unemployment.

Conversely, poor sales could cause a major shift in government policy, particularly given the changing make-up of the incoming Congress.

If retail sales are week, some (not many, but some) policymakers are finally going to realize that extending unemployment benefits won't make people shop. People are comfortable spending money when they have jobs; and a handout isn't the same as income.

Additionally, there have been a significant number of Americans whose unemployment benefits have been recently expiring after Democrats in Congress failed to push through an extension of benefits, much to the chagrin of 99ers who made headlines rallying for such an extension.

Sadly, though the US economy has improved modestly since bottoming after the crash of 2008, this recovery will be fruitless unless our leaders can encourage job growth. With real unemployment in this country at 17%, according to the BLS, the Unites States lacks sufficient consumers to support a continued recovery.

Before the US economy can see real growth to resume pre-crash levels, we need to see unemployment drop significantly. The current stated unemployment rate needs to be down around 5-6%, rather than its current 9.6%. This nation's policymakers need to be doing all they can to help business and foster job growth.

That brings us to the impact this shopping this holiday season will have on the investment world. From a financial perspective, the next several weeks should be very revealing as to whether monetary policy pursued as of late by Federal Reserve Chairman Ben Bernanke is having a positive impact.

Many people, particularly inflation watchdogs, believe that Mr. Bernanke's policies are detrimental to the US economy and that a new plan of action is needed.

Interestingly enough, while Bernanke's "quantitative easing" (read: printing money) has allowed for a mild economic recovery in this country, his policies have caused foreign economies to improve significantly more than domestically. Moreover, while his policies have helped to provide markets with liquidity, employment has not improved, but actually continued to worsen until just recently.

Consider Germany for example, who according to a recent Bloomberg article is preparing for its strongest holiday sales season since 2004. Though the rest of Europe remains bogged down in debt problems compounding fiscal policy worries, Germans are projected to spend more than 75 billion Euros between November and December.

Of course, since the financial crisis that began in 2008 Germany has pursued policies almost directly opposite to those of the United States. As a result, though doubts remain whether the EU can survive this mess, Germany has recovered much more substantially than its neighbors or the US.

In fact, leading up to the G20 summit in April of 2009, leaders in the US had the gall to attack German policy makers including Chancellor Angela Merkel by saying that they were failing to "fill the demand hole." More than a year later it is grossly apparent how Merkel's "boneheaded" policy has fared, as compared to the US's expansion of money supply and government spending under Bernanke.